$234,900 To Raise A Child?

As the father of a 10 month old daughter & with baby #2 expected to arrive this February, a recent article headline about the cost to raise a child caught my attention.

The article was a summary of a report by the U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, Expenditures on Children by Families – 2011. The report stated that a middle-income family ($59K – $103K) raising a child through age 17 would spend $234,900!

WHAT? Over a quarter of a million dollars before college!

Having a child (soon to be children), numerous nieces and nephews, and friends with children – I wanted to know the details behind this amount. Being a details type of person, I went to the actual 30+ page report to see the assumptions.

What I learned reading over the report is that the report was divided into six categories. The categories, percent of total, and dollar amounts are:

Housing – 30% = $70,560

Food – 16% = $37,620

Transportation – 14% = $33,900

Clothing – 6% = 13,500

Healthcare – 8% = $18,990

Childcare & Education – 18% = $41,100

Miscellaneous – 8% = $19,230

Details

In the details of the report it clarifies that the following costs are specifically excluded from the above amounts: any college costs, any contributions by people outside the household, and any government assistance. I’m glad they clarified that because I was sure those had to be in there.

My Take

Since I am a new parent, I don’t have any real evidence to disagree with the report – but I still disagree in some areas. I will give you my perspective on the six areas.

Housing – Disagree. When my wife and I were single, we each were renting a three bedroom apartment. When we got married, we moved into a three bedroom house. For us, our housing has not changed and was not influenced by children and it will not be until we have more than four or five children. So for my calculations I will not associate the $70,560 with raising a child.

Food – Undecided. By dividing the total, $37,260 by 18 years and again by 12 months – I get approximately $174 per month as the average cost to feed my daughter. I do know that since my daughter has been almost exclusively breast-fed for her first year that we have saved about $2,100 alone in her first year of food expenses. I don’t expect that we will come close to food costs of $174 per month for her for quite a few years.

Transportation – Disagree. Using the method previously described the report calculated the monthly transportation cost of $157. Since my wife came into the marriage with a paid for car and would have a vehicle regardless of if we had a child or not – there is no cost to associate with raising a child. Additionally I traded-down out of my large SUV into a used vehicle before we were married and did so before a child came along – nothing to add here.

Clothing – Agree. This comes out to an average of $63 per month or $750 per year. I think this is a little high but I can see how this may average out over time, especially as she grows rapidly.

Healthcare – Disagree. This comes out to about $88 a month or $1,055 per year. My healthcare is a family plan regardless of how many dependents I have and since I had my wife on my health insurance plan – there is no additional monthly cost. There are annual check-ups, physicals, etc… but those will likely add up to much less than $1,055 annually.

Childcare & Education – Disagree. This comes out to an average of $190 per month or $2,283 per year. In this case my wife has decided to stay at home so the childcare has been minimal the first year. We also plan to home school – so as time goes by our cost of school curriculum may drive this cost up closer to the average but I still think it will be lower than the reported amount.

Miscellaneous – Agree. This comes out to $89 per month or $1,068 per year. Since this category includes personal care, entertainment, and reading materials this category may actually be too low.

I plan to track as much of this as possible over the next few years and will provide updates periodically on our actual costs to raise a child.

What is your take on the report? Do the numbers accurately reflect your family’s costs?